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Ernst: Fiscal cliff? We fell off that years ago

Published: Tuesday, January 8, 2013 at 1:42 p.m.

Last Modified: Tuesday, January 8, 2013 at 1:42 p.m.

In line at Walmart the other day, a customer mentioned to the cashier that he had found work after an extended period of unemployment from construction. The new job doesn’t pay as well as the old one, though, he admitted.

“Nowadays we’re just lucky to have jobs,” the cashier responded. They both nodded.

The conversation may illustrate in part why regular people, and that’s most of us who earn wages and pay a higher tax rate than millionaire presidential candidate Mitt Romney, were so ambivalent about the well-publicized fiscal cliff.

We fell off it six years ago, and we’re still trying to climb back up.

In 2006, as the economy started to come unglued and the housing market began to tank, the collective we not only lost our jobs, but we lost the value in our homes, which had served as de facto savings accounts.

Suddenly, with no jobs and no savings, we were looking for work, competing with millions of others in the same predicament.

Those of us lucky enough to have kept our jobs have gotten no raises in six years. That’s not breaking even; it’s far from it.

According to the U.S. Department of Labor, the cost of living has gone up 14 percent since then. Whatever $1 could purchase in 2006 would cost $1.14 now. So no raise over six years really equals a pay cut.

Those of us lucky enough to find new jobs generally ended up with ones that paid less.

Those realities don’t show up in the employment statistics, which are kind of bogus anyway, because even though the rate of unemployment is coming down, many have given up looking for work. They are not included in the pool of unemployed.

Coming into the holiday season, that was the situation, with the fiscal cliff looming ahead and food pantries reporting a run on their emergency supplies.

No wonder Christmas retail sales lagged to the levels of 2008, during the darkest days of the Great Recession. It’s a greater surprise that analysts predicted they would rise 4 to 5 percent over last year. These experts certainly don’t live among us in the real world.

If things have stabilized a bit in the past six years, it’s only because we are sacrificing. We’re keeping our cars longer, we’re buying generic brands, we’re putting less money in our 401(k) retirement plans because we need it for daily expenses.

Whatever the collective we are doing, we’re doing it with less.

The fiscal cliff didn’t seem so dire, because our expectations had diminished so. We knew no matter what happened, we would suffer. Sure enough, Congress came up with a last-minute deal to avoid the worst.

Instead, we settled for worse. In case anyone missed it, households making $50,000 to $75,000 a year will average an extra $822 in federal taxes in 2013, those making $100,000 to $200,000 will pay $1,784 more on average. The increase comes because a Social Security tax break has expired.

At least the money invests in our own retirements. But the point is, for the next year, we’ll have even less money to spend on other items or to save for other purposes.

Maybe we need to reframe the political discussion. Government circles have developed a near reverence for so-called job creators, and a tax structure and other policies to match it. The result has been a shifting of the national wealth into fewer hands. Anyone who suggests greater recognition of the value of the people who actually perform the jobs is accused (by the job creators) of fomenting class warfare.

Until we demand that the politicians change that dynamic, we are looking ahead to a lot more of the same. Luck, it seems, is a relative term. Given the alternative, yes, those of us with jobs are lucky. We would be luckier if we were paid enough, or got to keep enough, to meet the rising cost of everything.

<p>In line at Walmart the other day, a customer mentioned to the cashier that he had found work after an extended period of unemployment from construction. The new job doesn't pay as well as the old one, though, he admitted.</p><p>“Nowadays we're just lucky to have jobs,” the cashier responded. They both nodded.</p><p>The conversation may illustrate in part why regular people, and that's most of us who earn wages and pay a higher tax rate than millionaire presidential candidate Mitt Romney, were so ambivalent about the well-publicized fiscal cliff.</p><p>We fell off it six years ago, and we're still trying to climb back up.</p><p>In 2006, as the economy started to come unglued and the housing market began to tank, the collective we not only lost our jobs, but we lost the value in our homes, which had served as de facto savings accounts.</p><p>Suddenly, with no jobs and no savings, we were looking for work, competing with millions of others in the same predicament.</p><p>Those of us lucky enough to have kept our jobs have gotten no raises in six years. That's not breaking even; it's far from it.</p><p>According to the U.S. Department of Labor, the cost of living has gone up 14 percent since then. Whatever $1 could purchase in 2006 would cost $1.14 now. So no raise over six years really equals a pay cut.</p><p>Those of us lucky enough to find new jobs generally ended up with ones that paid less.</p><p>Those realities don't show up in the employment statistics, which are kind of bogus anyway, because even though the rate of unemployment is coming down, many have given up looking for work. They are not included in the pool of unemployed.</p><p>Coming into the holiday season, that was the situation, with the fiscal cliff looming ahead and food pantries reporting a run on their emergency supplies.</p><p>No wonder Christmas retail sales lagged to the levels of 2008, during the darkest days of the Great Recession. It's a greater surprise that analysts predicted they would rise 4 to 5 percent over last year. These experts certainly don't live among us in the real world. </p><p>If things have stabilized a bit in the past six years, it's only because we are sacrificing. We're keeping our cars longer, we're buying generic brands, we're putting less money in our 401(k) retirement plans because we need it for daily expenses.</p><p>Whatever the collective we are doing, we're doing it with less.</p><p>The fiscal cliff didn't seem so dire, because our expectations had diminished so. We knew no matter what happened, we would suffer. Sure enough, Congress came up with a last-minute deal to avoid the worst.</p><p>Instead, we settled for worse. In case anyone missed it, households making $50,000 to $75,000 a year will average an extra $822 in federal taxes in 2013, those making $100,000 to $200,000 will pay $1,784 more on average. The increase comes because a Social Security tax break has expired.</p><p>At least the money invests in our own retirements. But the point is, for the next year, we'll have even less money to spend on other items or to save for other purposes.</p><p>Maybe we need to reframe the political discussion. Government circles have developed a near reverence for so-called job creators, and a tax structure and other policies to match it. The result has been a shifting of the national wealth into fewer hands. Anyone who suggests greater recognition of the value of the people who actually perform the jobs is accused (by the job creators) of fomenting class warfare.</p><p>Until we demand that the politicians change that dynamic, we are looking ahead to a lot more of the same. Luck, it seems, is a relative term. Given the alternative, yes, those of us with jobs are lucky. We would be luckier if we were paid enough, or got to keep enough, to meet the rising cost of everything.</p><p><i>Eric Ernst's column runs Wednesdays, Fridays and Sundays. Contact him at eric.ernst@heraldtribune.com or (941) 486-3073.</i></p>